Page 122 - RusRPTDec21

(Bloomberg) and more than 50% below for beef (World Bank), all for live weight. As a result, there is a limited impact from the potential duty-free imports of pork at the announced volumes and existing pricing on the market, while beef could experience more notable pricing pressure. However, it remains a niche meat category domestically, without exposure in the product mix of public farming producers.
The National Union of Milk Producers (“Soyuzmoloko”) notes a serious slowdown in the growth of commercial milk production, Russian media informed. “Over the past years, we have grown by an average of 1 million tons, or 4-5% per year. But this year we expect an increase under a good development scenario of no more than 1%, and, most likely, it will be 0.5-0. 7% or about 150 thousand tons of commercial milk only,” Alexei Voronin, director of the analytics department of the union, said. According to Rosstat, the production of raw milk in Russia is declining. “In the commodity sector, we expect a slight increase, but this increase will not be comparable with the levels of previous years,” Voronin explained.
For the first 4 months of the MY22 (1 July - 28 October), wheat exports from Russia reached 12mnt (-25% y/y).
Such trends are primarily due to the overall grain harvest decline in Russia (-9% y/y, 121.7mnt), while the wheat harvest is to correct 12% y/y (to 75.6mnt).
IKAR estimates grain and wheat exports will contract 17% y/y (41.5mnt) and 18% y/y (32mnt), respectively, on the back of regulatory export limitations, a smaller harvest, and farmers preferring to stock up. Regarding the regulatory regime, we note the floating export tariff, which currently stands at $67/t, or 20% of the export price (Wheat, 27 October-9 November) and the potential introduction of a separate quota for wheat exports (from 15 February 2022), apart from the general grain export quotas imposed in the last two seasons (17.5mnt in February-June 2021). In the context of lower global supply, grain prices continue to rally: Russia's FOB Novorossiysk is up 30% in September-October and now stands at $315/t; USA's FOB Fulf stands at $331/t (+21% y/y); FOB Ruen increased 33% y/y ($332/t).
According to the Ministry of Agriculture, export quotas are to remain in place for the next few seasons, while we do not see them as materially lower than available grain volumes, fairly reflecting the domestic supply-balance, as in the last two farming years. Those measures bring stabilisation to domestic prices and create grounds for the further consolidation of the export trade.
122 RUSSIA Country Report December 2021 www.intellinews.com